20 June 2014

PNG business divided on impact of a stronger kina

WHILE Papua New Guinea-related businesses are divided on the impact of a stronger kina, all agree it will have some effect on their business, according to a Business Advantage PNG poll.

The poll has been conducted since the Bank of Papua New Guinea’s move to increase the value of the national currency against the US dollar.

According to the poll results, 36% of respondents said a stronger kina would be positive for their business, while 28% said it would have a negative impact.

A further third said the effect would effectively balance out for their business, with both positive and negative effects.

Significantly, however, nearly all respondents indicated there would be at least some impact on their business, with none saying their business wouldn’t be affected.

While the Bank of PNG’s unusual move to restrict trading the kina within a 75 basis points either side of US$0.4130 improves the buying power of the country’s importers, the impact on rural exporters is causing concern.

Ian O’Hanlon, President of the West New Britain Chamber of Commerce and Industry, has called for a re-evaluation of the move, suggested the income from the province’s major export, palm oil, could drop by as much as K50 per tonne of fruit.

“The palm oil industry is a hugely important economic driver in West New Britain,” Mr O’Hanlon said.

“There are over 150,000 people that are dependent on the business within the province. WNB rises and falls on the back of this one commodity.

“When oil palm prices are high everyone enjoys the flow-on effects. When prices are low, everyone in WNB suffers.”

Meanwhile, the ANZ Bank, one of the largest foreign exchange providers in PNG, says it is still assessing the impact of the decision.